Morgan Stanley to Keep Commission-Based IRAs for Wealth Management CustomersMorgan Stanley to Keep Commission-Based IRAs for Wealth Management Customers
Morgan Stanley announced it will continue to give wealth management clients as choice, in contrast to competitors like Bank of America's Merrill Lynch.
October 26, 2016
By Olivia Oran and Nikhil Subba
Oct 26 (Reuters) - Morgan Stanley said on Wednesdayit would allow its wealth management clients to choose the waythey pay the firm for retirement accounts covered by a newfiduciary rule.
The company's customers will have the choice of payingcommissions or a fee based on the value of their assets foraccounts subject to the new rule. (http://bit.ly/2eGID6O)
The Department of Labor rule, announced in April, sets astandard for brokers who sell retirement products and requiresthem to put clients' best interests ahead of their own bottomline.
The new regulation will take effect in 2018, givingbrokerages time to comply.
The move puts Morgan Stanley in contrast to Bank of AmericaCorp which said earlier this month it would eliminateindividual retirement accounts that charge investors for eachtransaction. Investors who want a retirement account willinstead need to pay a fee that is a percentage of their assets.
Bank of America's decision is intended to reduce conflictsthat might arise if brokers push clients to more expensiveinvestment products.
Morgan Stanley Chief Executive Officer James Gorman toldanalysts last week it does not think giving wealth clients achoice will present compliance problems.
During the third quarter, revenue from Morgan Stanley'swealth management unit rose 7 percent to $3.9 billion. Thebusiness hit a 23 percent pretax margin, in line with Gorman'starget for year-end. (Reporting by Nikhil Subba in Bengaluru and Olivia Oran in NewYork; Editing by Bernard Orr)
